Draghi tries to assure Germans that ECB won't intervene to ensure solvency of a country

Share

Peter Spence

European Central Bank (ECB) president Mario Draghi has tried to reassure Eurozone members that the ECB won't act to ensure the solvency of a country, and that generally a country will be allowed to become insolvent.

Draghi guaranteed that a higher inflation rate will not be used to solve debt crises and that interest rates will rise once confidence returns to the area.

These comments were likely targeted at Germany, where voters are becoming understandably worried that German taxpayers will be asked to bail out insolvent nations across Europe. Draghi seems to be trying to calm these concerns, and denying that problems of moral hazard may arise.

He even went so far as to say that indebted countries should follow Germany's 2003 reforms. Fairly overt PR from Draghi here.